Presented by: Elliot F. Eisenberg, Ph.D. October 26, 2010 College Station, TX THE METRO AREA IMPACT OF HOME BUILDING IN BRYAN & COLLEGE STATION, TX

LOCAL ECONOMIC IMPACT Construction phase Jobs Materials Local fees, taxes, contributions Ripple or feed-back from construction Wages spent in local economy Occupancy phase Earnings spent in local economy

The model does not say build housing to stimulate the local economy Rather, it is job creation that results in increased demand for housing, but remember that…..

CONSTRUCTION PHASE INPUTS : OUTPUTS: MODEL OF THE LOCAL ECONOMY INCOME FOR LOCAL RESIDENTS & TAX/FEE REVENUE FOR LOCAL GOVERNMENTS VALUE OF CONSTRUCTION SERVICES PROVIDED AT CLOSING PERMIT/HOOK-UP FEES $ $ $ $ $ (Obtained from Local Sources)

RIPPLE PHASE INPUTS: OUTPUTS: LOCAL INCOME & TAXES MODEL OF THE LOCAL ECONOMY LOCAL INCOME & TAXES FROM PHASE 1 SPENDING ON LOCAL GOODS & SERVICES Consumer Expenditure Survey (U.S. Bureau of Labor Statistics)

OCCUPANCY PHASE INPUTS: OUTPUTS: MODEL OF THE LOCAL ECONOMY LOCAL INCOME & TAXES SPENDING ON LOCAL GOODS & SERVICES PROPERTY TAX PAYMENTS INCOME OF HOUSEHOLD OCCUPYING NEW HOUSING UNIT

Bryan-College Station, TX MSA

The Bryan-College Station, TX MSA Multiplier Only Captures Spending that Stays in the Area Includes: Banking, Car Repair, Dry Cleaning, Day Care Services, Dental Services, Electricity, Landscaping, Legal Services, Manicures, Medical Services, Newspaper Delivery, Restaurants and Psychiatric Care. But Not: Auto Manufacturing, Beer Bottling, Mattress Manufacturing, Meat Packing, Movie Production, and Travel Agency Services

History of the Model Over 650 Economic Impact Analyses Performed Users of the Model Include: Boone County Kentucky Habitat for Humanity, International MI State Housing Development Authority Michigan State University Missouri Housing Development Commission University of Florida University of Massachusetts University of Montana West Virginia Housing Development Fund…

Assumptions of the Model Inputs To Model Single Family Average house price: $263,201 Average raw lot cost: $26,171 Permits/Infrastructure: $5,071 Annual property taxes: $5,508

Economic Impact of Single Family Home Building 1 st - Construction phase 2 nd - Ripple effect from construction phase 3 rd - Occupancy phase 4 th - Ten year total

FIRST YEAR IMPACT: SF Construction Every 952 SF Homes INCLUDING: 1,680 Jobs in Construction 361 Jobs in Wholesale & Retail Trade 210 Jobs in Business and Professional Services

FIRST YEAR IMPACT: SF Ripple INCLUDING: 266 Jobs in Wholesale and Retail Trade 253 Jobs in Local Government 140 Jobs in Health, Education & Social Services

ONGOING SF ANNUAL EFFECT INCLUDING: 184 Jobs in Wholesale and Retail Trade 170 Jobs in Local Government 94 Jobs in Health, Education & Social Services

Total SF Impact: First Ten Years Local IncomeLocal Taxes $442,069,000$123,601,000 Along with 3,622 temporary jobs And 839 permanent ones!

Largest Local Employers Employer # of FT Jobs Texas A&M University System 16,000 New SF Residential Construction 2,390 St. Joseph Regional Hospital 2,197 Bryan Independent School District 2,070 Sanderson Farms 1,574 College Station Independent School District 1,530 Reynolds & Reynolds 1,059 City of College Station 1,027 Brazos County 900 Wal-Mart Stores, Inc. 850 City of Bryan 789 Alenco Windows 611 H.E.B. Grocery 590

BUT NEW HOMES REQUIRE: Fire and police protection Garbage collection Parks and recreational opportunities Roads Correctional facilities Primary and secondary education Etc… INFRASTRUCTURE

Required Current Expenses per SF Unit

Required Capital per SF Unit

Does new construction pay for itself? The benefits of construction & The costs of construction Now that we know:

By the 2 nd year economic impacts offset fiscal costs By the end of the 2 nd year the debt is fully paid off In the 2 nd year, net is $5,441,455 and is $5,680,775 thereafter Yes it does! For every 952 SF units--

Over 15 years, every 952 SF units generate a cumulative $178.9 million in revenue for local governmentsbut only $105.3 million in costs

New Assumptions of the Model Inputs To Model Single Family Average house price: (was $263,201) $197,401 Average raw lot cost: $26,171 Permits/Infrastructure: $5,071 Annual property taxes: $4,131

By the 2 nd year economic impacts offset fiscal costs By the end of the 2 nd year the debt is fully paid off In the 2 nd year, net is $5,441,455 and is $5,680,775 thereafter Yes it still does! For every 952 SF units--

What does 2 years mean? That is, should it be done faster, or is it O.K.? Big purchases take time to pay off. Car loans now last 5 years, and many lease! How fast did you pay off your student loans? How fast are your kids paying off theirs? Did you pay off your home in 2 years?

Almost done, just a bit more

How Large Are Non Property Tax Revenues Single family property taxes are $5,508/unit per year but, yearly revenue is $11,624/unit per year, which is 111% more. Clearly, property taxes are not the whole story!

A Closer Look at Primary and Secondary Education 12.6% attend private schools nationally 1.7% are Home schooled nationally 0.4 school age children/MF unit nationally 0.6 school age children/SF unit nationally TX school aid is $92 million or 51% of budget

Elliot F. Eisenberg, Ph.D. Call: Fax: th Street NW Washington, DC Thank you very much! ANY QUESTIONS?